Fully recognizing that Apple's 30% is highway robbery, isn't Google's "only 10%" still fairly outrageous? This seems like more a 5% feature, since the app providers still have to provide all their own infrastructure to actually support the subscription.
This isn't a "processing" fee. This is a new kind of fee. It's a "platform access" fee. Apple sees value in the fact that they've cultivated a mass of users who are more than willing to repeatedly spend small amounts of money on content. I don't think that point can be overstated. iOS users buy a ton of content, and anyone with content to push wants access to them.
Hence, the standard rules of supply and demand apply. If you control 100% of the supply, you are a monopoly, so the question will become one of defining the supply. Is it iOS users? Is it mobile device owners? Is it media consumers? Where the definition falls on that continuum will define the outcome of the investigation.
I'd be very surprised if the regulatory agencies defined the supply as iOS users, so I think Apple will get away with this. Not that it matters much. I believe Apple has crossed the critical tipping point where sustainability exists only in niches, and will ultimately push away so many content distributors that the actual creators (those with the room to sell at a 30% markdown) won't be able to fill in the gaps fast enough. There will be volumes of content available on other platforms, and the attractiveness of iOS devices (and platform) will diminish. This will have the effect of accelerating competing platforms' growth lead. At that point, Apple will either react to the market, or relegate themselves to a small portion of the market that they will happily turn a huge profit on.
This platform-markup (30%) will affect other players because in order to show any of your content on iOS, you must not just mark up your price, but Apple demands price matching with other markets... that's the uncompetetive part, as that will just raise prices for everyone, unless all those subscription services and content providers ditch iOS en-masse (unlikely).
If Apple were to relinquish their price-match requirement (unlikely) or allow apps that had no external store references (more likely), they would not cause such an upheaval in pricing.
I don't disagree. The question, I think, is whether or not regulatory agencies will force Apple to re-tool their terms. That will depend on whether or not Apple is found to have a dominant position in "the market". No one has defined "the market" yet though.
The difference is, Apple's 30% is a requirement to do business on their platform. Apple can charge whatever they want because there is no competition--you're not allowed to use other providers. Your only option is to leave iOS, which isn't really an option for a lot of companies.
Google isn't mandating anything; if a company finds 10% to be reasonable for the services provided, they can make use of it. Otherwise they can do it themselves, or use another provider.
I was thinking about this myself, and I'm having fun imagining an ongoing argument at Google:
M: I just don't know. 10% seems high.
A: But it's a great service, and developers will pay for the convenience.
B: M's right, 5% would be a better rate; we're not planning to force people to use it and if it's too high they'll just go somewhere else. 5% might even be too high.
M: I'll think about it.
A: But you've been thinking about it for weeks! We can't release until we agree on a number. And I still...
[all are interrupted by video of Apple announcing their 30% policy with mandatory participation]
Does google require you to use their service the same way apple does? Or is their service just there for developers that want to use it(at a 10% cost?)
I believe the latter. Android has always allowed app installs not-from-the-market. Some CARRIERS (notably AT&T) have removed that ability for some handsets, but it's not universal and as far as I know, not common.
Right. Now when Apple gives in and drops the fee to 15%, everyone will relax, even though if they'd asked for 15% initially, they would have gotten much the same reaction they're getting now. It's a brilliant strategy.
10% does seem a bit high, but it is also unclear what the terms actually are. Google's system is pretty vague at the moment and seems much more varied than the Apple plan to the point I can't imagine a straight 10% off the top is the deal.
Of course, as far as regulators are concerned, the big difference is Google isn't railroading publishers into using it on Android or enforcing price matching.
10% is still a bit much, I guess. But it's pretty damn smart of Google. Apple announces 30%, everyone gets pissed. Google comes out and announces their plan and doesn't make a big deal about any of it. Everyone wants to know how much Google takes and when they find out it's 10%, Google wins.
> the app providers still have to provide all their own infrastructure
Like the credit card processing, the hardware manufacturing facilities in China, the software libraries, the industrial designers...
Apple has made it absurdly convenient to consume rich content. They have built fucking science fiction. 30% to get delivered to someone anywhere, any time is a bargain. You're paying to be part of the gut wrenchingly difficult channel Apple has created from scratch, which no one else had the foresight to predict or the balls to put money behind.
Apple bet the damn farm on this crazy iDevice shit and they get to charge whatever they like for it now that it works. Anyone who doesn't like it can go build their own fully integrated platform.
The problem I have with that argument, though, is that I already gave Apple $630 for my iPad, specifically because I can read Kindle books on it. I'd really like to be able to continue reading my Kindle books on it, and I really don't give a damn if Apple thinks they're somehow entitled to a cut of Amazon's sales for that.
Yes, Apple does bear the cost of maintaining the app store, but my sympathy for them on that point is rather limited considering that they're the ones who insist everything must go through the app store.
I can see both sides of the argument, but I still think Apple is being unreasonable. Really, I think this is the same as network neutrality -- just because Apple provides a platform doesn't mean they're entitled to a cut of every sale on it any more than it means Time Warner is entitled to a cut of Apple's sales every time I rent a movie through the iTunes store. Apple already got my money off the hardware (not to mention the other apps I've bought) and Time Warner's already getting my monthly subscription fees.
Now, if you want to argue that 30% is reasonable if Apple is doing the content hosting and other stuff, sure. 30% just to process a convenient payment? No fucking way.
So we'll let the market decide which approach provides better value and a better user experience. Sounds like we've all got options, so what's the problem?
Because Apple's terms are distinctly anti-market. Apple is forcing vendors that sell content on their platform to incur a 30% overhead, and then forcing them to maintain the same pricing across all platforms.
So you have an overhead that doesn't exist on other platforms artificially introducing pricing inefficiencies elsewhere. Just the tip of the iceberg, really.
I've got one problem, but I haven't really figured out how it fits in exactly.
Assuming a lot of things in how this plays out, I don't find it terribly unlikely that some subscription services will have to raise their rates to maintain a profit. Maybe not a big problem for iOS users, since they get the benefit of using the app store for purchases.
What about non-iOS users? I subscribe to Netflix, but I don't use any apple products to access that subscription. According to Apple's rules, Netflix can't have the subscription available at different prices, and so my price goes up because of Apple's policy.
There may be some ways around this, like Netflix offering two plans - one that includes iOS use, one that doesn't - without hiking the latter. But they might not.
I haven't yet worked out what the "fairness" of this all is. As a consumer, I certainly don't feel that I am entitled to never having price hikes, and I realize at the same time that some of the money from products I pay for is used to support products that I don't pay for. But this feels wrong to me - maybe it's just the directness of it. Apple says "pay more" and even people who don't buy Apple products have to pay more.
The problem is Netflix can't offer their content to Apple customers at $13, and everyone else $10. Apple using their position to remove those options you say consumers have.
The problem is that YOU're going to end up paying an additional 30% of the price. Don't be fooled...those companies at the other end of the subscription will pass that 30% straight to you.....
Is that hard? I mean, yes, it took tons of manhours and billions of dollars, but the "fucking science fiction" they made is pretty much par for the course these days. You can say it is a "superior user experience" and stuff like that, but c'mon. That is how tech advances. If I wanted, it would be quite trivial to get something delivered to someone anywhere without anything made by Apple.
I'd amazed by how much people support one of the richest companies in the world get richer off the backs of others. After all, it isn't like they are hurting for money.
> I'd amazed by how much people support one of the richest companies in the world get richer off the backs of others.
Apple is getting rich by making extremely good stuff. I support them getting richer because I want them to continue making really good stuff I enjoy using. Because I can't trust any other company in the world to do that hard work.
Fucking science fiction. Consumer wireless devices were dull, stodgy things until Apple came in and said "fuck you, this sucks" and did it better. Innovation was putting an ugly resistive color screen into the clunky enclosures from six years earlier. Spicy.
I am just missing the connection between "making good products you like" to "making it cool to have all the money in the world". You paid for the device. Apple was (more than) suitably compensated. It should end there.
I personally think Netflix/Amazon/Spotify are doing science fiction too (every movie and song ever made, at your fingertips in a second!) and I would like them to survive too.
But then again, I buy a MacBook Pro instead of a junky plastic laptop. I'll pay a premium for quality, so will another chunk of the market and everyone else can fight over the Wal-Mart segment.
Not at all. Because unlike Apple, Google isn't forcing people to play by their rules; they're just holding this out as an option for those developers who choose to use it.
It's the cost of doing business on the App Store. You always have the option to serve your customers on their iOS devices over the web. If you want the convenience of the App Store and a native app, then 30% is the going rate.
And paying the bandits on the highway was the cost of doing business if you wanted to run your trade caravan through the forrest.
I love my Apple products. I'm in awe at what the company has accomplished over the last decade. That doesn't mean they can do no wrong and their decisions can't be questioned.
I'm not talking about the cost of doing business here. I'm talking about the cost of being a customer here and the potential cost I might be forced to take, even if I decide not to be a customer any longer. If Netflix raises its prices across the board so they can stay in the garden, then it doesn't matter whether I accept Apple's rules or not: the prices are raised across the board.
The parent comment makes no mention of any terms beyond the 30%.
I agree that there seem to be some questionable terms (especially involving the most favored nation clause) but the 30% fee itself is simply not highway robbery.
There are two roads to your customer on an iPhone. One is nicely paved with trees planted and maintained for maximum appearance, and if you take this road you're charged 30%. The other road is a path in the forest where maybe you need to chop down some trees as you go, but there is no 30% fee. There are no robbers in any of these options, one just happens to include a toll booth and you can decide if the nice view and comfortable ride is worth paying the toll.
There are places I think the 30% is completely reasonable. As another comment here mentions, trying to do $1 transactions using Paypal or a merchant account would be insane. Taking a 30% cut on applications, where they are not just processing money, but also providing distribution and other infrastructure is fine.
My complaint is taking a flat 30% of all subscriptions and digital purchases where their only value-add is as a credit card processor. As I said originally, I think Google's 10% is also steep for this same feature, but, as others pointed out, you aren't required to use theirs, so if you find a better deal, good for you. Also, Google's 10% won't cause my iPhone subscriptions to go up by 10%, but Apple's 30% may cause my Android subscriptions to go up 30%.
This is still hypothetical, and it is a hard problem to solve. On the one hand, you have Netflix that has a huge infrastructure and large supplier costs who is already set up to do very well at $15/month. On the other hand, you have Po Dunk Developer who wants to add $0.99 subscriptions to his app. 30% on the former is too much; 30% on the latter is reasonable. How do you reconcile?
Most businesses would provide a way for Netflix to enter a formal agreement that pays some amount up front, then lowers the percentage. I have to wonder if Apple will go that path (or something similar) as well. I hope so.
But Apple made the other path illegal, so as it stands, you have to give the bandits your money.
Personally, I just hope people realize the kingdom of Android has a much nicer path. Sure, some parts aren't as nice as iOS, and the locals tend to do less business, but there are no bandits, and no gate keeping you out if the king suddenly decides he doesn't like what you're selling.
